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Milo & Gabby, LLC, v. Amazon.com, Inc.

United States District Court, W.D. Washington, Seattle

July 16, 2015

MILO & GABBY, LLC, and KAREN KELLER, an individual, Plaintiffs,
v.
AMAZON.COM, INC., Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

          RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This matter comes before the Court on Defendant's Motion for Summary Judgment on the remaining claims in this action. Dkt. #30. Defendant, Amazon.com, Inc. (“Amazon”), argues that it is entitled to summary judgment on Plaintiffs' remaining claims for direct patent infringement, direct copyright infringement, false designation of origin under the Lanham Act, and violation of the Digital Millennium Copyright Act, primarily because the alleged infringing actions were committed by third-party vendors and not Defendant. Id. Plaintiffs argue in opposition that Defendant is liable under several theories of law, including vicarious liability, such that summary judgment is precluded. Dkt. #36. Having reviewed the parties' briefing, and having determined that no oral argument is necessary on this motion, the Court disagrees with Plaintiffs in part and GRANTS IN PART and DENIES IN PART Defendant's motion.

         II. BACKGROUND[1]

         Plaintiff MILO & GABBY, LLC is a Washington State limited liability company that designs and sells animal-shaped pillow cases, among other accessories and bedding products. Plaintiff Karen Keller and her husband are the founders and product designers of Milo & Gabby, LLC (“Milo & Gabby”). Dkt. #1 at ¶ 7. According to Ms. Keller, the couple's four children and two family pets inspired the Kellers to create the Cozy Companion Pillowcases product line for Milo & Gabby. Dkt. #1 at ¶ 7. The line consists of eight animal shaped pillowcases that function as a combination between a pillow and a stuffed animal.

         Plaintiffs are the authors and owners of various U.S. Copyrights and U.S. Design Patents. See Id. at ¶ 10. On September 11, 2007, the Milo & Gabby design mark was registered with the U.S. Patent and Trademark office and was assigned U.S. Trademark Registration Number 3291697. Id. at ¶ 8. In addition, Milo & Gabby's website and marketing images are protected by valid U.S. copyrights. Id. at ¶ 10.

         For several years, Milo & Gabby has designed, sold, and distributed its products to retailers and e-tailers throughout the United States and internationally. Id. at ¶ 11. During this time, Milo & Gabby's animal-themed children's accessories have seen commercial success. Id. In 2012, Milo & Gabby entered into an exclusive license arrangement in Asia, and since then the company has made promising gains. Id. Milo & Gabby aims to further expand its operations by entering into license agreements throughout North America. Id. at ¶ 12. However, Milo & Gabby claims these efforts were halted when Amazon.com allegedly began selling direct knock-off copies of Milo & Gabby's Cozy Companion Products. Id. at ¶ 13.

         Amazon is a company that operates a widely used internet service retail website at http://www.amazon.com. Dkt. #35 at ¶ 2. Amazon.com enables third-party vendors to sell and distribute a variety of products to the public, while Amazon “fulfills” the orders through Amazon.com. Dkt. #35 at ¶ ¶ 2-3 and 11.

         When a third-party seller wants to offer a new product for sale on the Amazon.com platform, the third-party seller is responsible for sending Amazon, via an automated file upload system, content related to the new product, such as a product description, an image of the product, and the product's price. Id. at ¶ 5. This content is used to automatically generate a “product detail page” and, in some instances, to create advertisements related to the new product. Id. at ¶ 6; Dkt. #33 at ¶ 4; and Dkt. #32 at ¶ 2. The third-party seller is responsible for the uploaded content, and specifically represents and warrants that it has the right to grant Amazon a license to use all content, trademarks, and other materials provided by it. Dkt. #35, Ex. A at ¶ ¶ 4-5 & Definitions and Ex. B. Under Amazon's Intellectual Property Violations Policy, third-party sellers are responsible for ensuring that the products they offer for sale are legal. Id. at ¶ 9 and Ex. D. With respect to images, third-party sellers agree that it is their responsibility to “ensure that [they] have all the necessary rights for the images [they] submit.” Id. at ¶ 10 and Ex. E.

         Third-party sellers may ship their products to customers directly or, for a fee, use the “Fulfillment by Amazon” (“FBA”) service. Dkt. #34 at ¶ 2. Third-party sellers who use Amazon's FBA service retain legal title to their products, while Amazon provides fulfillment services for the products, such as storage and shipping. Id. at ¶ ¶ 3-4.

         Plaintiffs allege that Amazon offered and sold infringing pillowcases via Amazon.com, using their marks and copyrighted images in the pillowcase offerings. Plaintiffs contends that Amazon is “the real ‘seller' of the knock-off products” because: (1) the “products are advertised on the amazon.com domain”; (2) “[p]ayment is made directly to Amazon”; (3) “Amazon issues the invoice and tracking information”; (4) “Amazon ships the products in a box that bears the ‘Amazon' logo”; and (5) “Amazon broadcasts email advertisements from its own account (not the manufacturer's) offering the knock-off products.” Dkt. #11 at 3.

         However, according to Amazon, all allegedly infringing pillowcases at issue in this case were offered and sold by third-party sellers. Dkt. #35 at ¶ 15. Amazon is not the seller of record for any of the allegedly infringing pillowcases. Id. and Dkt. #1, Ex. C. The content for the allegedly infringing pillowcases (including product name, description, and images) displayed by Amazon was provided by third-party sellers. Dkts. #35 at ¶ 16; #33 at ¶ 3; and #32 at ¶ 3. Amazon did not actively copy any of Plaintiffs' images. Dkt. #35 at ¶ 16. Nor did Amazon alter, modify, or remove any copyright registration information, or other information, related to any images or content supplied by third-party sellers in conjunction with third-party seller offerings of the allegedly infringing pillowcases. Id. In fact, all images and other content provided to Amazon by third-party sellers did not contain any visible patent, copyright, or trademark registration information. Id. Amazon did provide FBA services to one of the third-party sellers (FAC System LLC) that offered allegedly infringing pillowcases. Id. at ¶ 17.

         Upon receipt of the instant lawsuit in October 2013, Amazon investigated Plaintiffs' allegations and removed within days the allegedly infringing pillowcase offerings. Dkt. #35 at ¶ 20. During the course of this case, additional third-party sellers have offered allegedly infringing pillowcases. Id. at ¶ 21. As soon as Amazon learned of, or was made aware of, the additional allegedly infringing offerings, Amazon also promptly removed the offerings. Id.

         On October 24, 2013, Plaintiffs filed the instant lawsuit alleging that Amazon was using Plaintiffs' intellectual property to wrongfully market, sell, and distribute inferior-quality knockoffs of Plaintiffs' animal-shaped pillowcases on the amazon.com website. On April 11, 2014, the Court granted Defendant's Rule 12(b)(6) motion and dismissed Plaintiffs' claims for unfair competition under Washington's Consumer Protection Act; right of publicity; and trademark counterfeiting. Dkt. #13. The Court also struck Plaintiffs' claim for patent infringement based on any allegation of induced, contributory, or willful patent infringement, as well as Plaintiffs' claim for indirect copyright infringement. Id. The parties have since attempted to resolve this matter and have agreed that a Markman hearing is not necessary as the patents at issue are design patents. Accordingly, the instant motion is now ripe for review.

         III. DISCUSSION

         A. Plaintiffs' Overlength Brief

         As an initial matter, the Court addresses Plaintiffs' overlength brief which was filed without permission of the Court. This Court's Local Rules specifically provide that motions for summary judgment and briefs in opposition thereto shall not exceed 24 pages in length. LCR 7(e)(3). Further, the Rules provide that, while disfavored, parties may seek permission to file overlength briefs, and such requests must be filed three days prior to the date the underlying brief is due. LCR 7(f). No such permission was sought by Plaintiffs in this case. Rather, Plaintiffs simply filed a 32-page opposition brief. Dkt. #36. Because Plaintiffs did not seek permission to file eight extra pages of briefing, the Court refuses to consider certain text not contained within the applicable page limits. LCR 7(e)(6). In this case, in an effort to review the substantive arguments made by Plaintiffs, the Court will exclude from consideration the first five pages of the brief, which encompass the introduction, summary judgment standard and a motion to strike certain of Defendant's declarations supporting its motion for summary judgment. Dkt. #36 at 1-5. The Court also will not consider the final page of the brief, which consists of a one-sentence conclusion. DKt. #36 at 2. The Court will consider Plaintiffs' substantive arguments contained at pages 5-31 of their brief.[2]

         B. Plaintiffs' Motion to Strike

         Because Plaintiffs' motion to strike will not be considered, the Court will review all evidentiary material presented by Defendant, and will afford it due consideration as discussed herein.

         C. Legal Standard on Summary Judgment

         Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). In ruling on summary judgment, a court does not weigh evidence to determine the truth of the matter, but “only determine[s] whether there is a genuine issue for trial.” Crane v. Conoco, Inc., 41 F.3d 547, 549 (9th Cir. 1994) (citing Federal Deposit Ins. Corp. v. O'Melveny & Meyers, 969 F.2d 744, 747 (9th Cir. 1992)). Material facts are those which might affect the outcome of the suit under governing law. Anderson, 477 U.S. at 248. A factual dispute is “genuine” if the evidence is such that reasonable persons could disagree about whether the facts claimed by the moving party are true. Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir. 1983). [T]he issue of material fact required . . . to be present to entitle a party to proceed to trial is not required to be resolved conclusively in favor of the party asserting its existence; rather, all that is required is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial. First Nat. Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968).

         The Court must draw all reasonable inferences in favor of the non-moving party. See O'Melveny & Meyers, 969 F.2d at 747, rev'd on other grounds, 512 U.S. 79 (1994). However, the nonmoving party must make a “sufficient showing on an essential element of her case with respect to which she has the burden of proof” to survive summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Further, “[t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 251.

         D. Direct Copyright Infringement

         Plaintiffs allege that Amazon publicly displayed Plaintiffs' copyrighted images on the Amazon.com website and distributed allegedly infringing goods with Plaintiffs' copyrighted images on the product labels in violation of established copyright laws. Dkt. #1 at ¶¶ 28-31. Defendant argues that this claim must be dismissed because there is no evidence that Amazon actively participated in, or directly caused, the alleged copying of Plaintiffs' images, and even if there was such evidence, Amazon is immune from liability under the Section 512(c) safe harbor provision of the Digital Millenium Copyright Act (“DMCA”). The Court agrees with Defendant.

         1. Direct Copyright Infringement

         “‘To establish a claim of copyright infringement by reproduction, the plaintiff must show ownership of the copyright and copying by the defendant.'” Fox Broad. Co. v. Dish Network L.L.C., 747 F.3d 1060, 1066-67 (9th Cir. 2014) (quoting Kelly v. Arriba Soft Corp., 336 F.3d 811, 817 (9th Cir. 2003)); see also 17 U.S.C. §§ 106(1), 501(a). Accordingly, infringement of the reproduction right requires “copying by the defendant, ” which comprises a requirement that the defendant cause the copying. Fox Broad. Co., 747 F.3d at 1067 (emphasis added; citations omitted). In this case, there is no evidence in the record that Amazon actively reviewed, edited, altered or copied Plaintiffs' images. See Dkt. #35 at ¶ ¶ 17-18. Rather, the content of the website was provided by a third-party vendor, and was handled in an entirely automated manner to generate product detail pages or ads. Dkts. #35 at ¶ 6; #33 at ¶ 3; and #32 at ¶ 2. Plaintiffs respond with two arguments - first, that Defendant is vicariously liable for the third-party's infringement, and second, that Defendant is liable for direct infringement because it accepts and stores the infringing images. Dkt. #36 at 7-21.

         The Court first addresses Plaintiffs' vicarious liability arguments. Dkt. #36 at 7-12 and 14-21. A defendant is vicariously liable for copyright infringement if he enjoys a direct financial benefit from another's infringing activity and “has the right and ability to supervise” the infringing activity. Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004) (citations omitted). “Financial benefit exists where the availability of infringing material ‘acts as a “draw” for customers.'” Id. at 1078 (citations omitted).

         Plaintiffs have never raised this theory of vicarious liability in their Complaint, nor have they alleged any facts in their Complaint providing notice to Defendant that they intended to advance such a theory. See Dkt. #1. Rather, Plaintiffs have alleged that Amazon, “without authorization, is distributing copies of Milo & Gabby's copyrighted works as the Amazon knock-offs and as labels on the Amazon knock-offs. . . ., is publicly displaying numerous Milo & Gabby copyrighted images on the amazon.com website. . . ., [and] is distributing numerous Milo & Gabby copyrighted images on the labels of its Amazon knock-off products. . . ., [in] violation of the U.S. Copyright Act, 15 U.S.C. § 501, et. seq.” Dkt. #1 at ¶¶ 29-32; see also Dkt. #1 at ¶¶ 7-24. After the Court previously examined this copyright infringement claim and dismissed it to the extent the claim was based on a theory of indirect trademark infringement, Dkt. #13, the only remaining basis for the claim has been direct infringement. Plaintiffs never moved to amend the Complaint to add a claim for vicarious infringement or seek clarification that any theory of vicarious infringement had not been subsumed in the Court's ruling on indirect infringement. Accordingly, the Court will not consider Plaintiffs' vicarious liability arguments. Pickern v. Pier 1 Imports (U.S.), Inc., 457 F.3d 963, 965 (9th Cir. 2006) (finding that a district court need not address allegations raised for the first time in response to a motion for summary judgment if the plaintiff's “pleadings did not provide sufficient notice of those allegations.”); Williams v. Fed. Express Corp., 2013 U.S. Dist. LEXIS 72722 at *25 (W.D. Wash. May 22, 2013) (dismissing a claim on the basis that a plaintiff may not assert new causes of action or theories of recovery for the first time in an opposition to a motion for summary judgment).

         Thus, the Court turns to Plaintiffs' argument that Defendant's acceptance and storage of the alleged infringing images alone is enough to violate the Copyright Act. Dkt. #36 at 12-14. Central to a finding of direct copyright infringement is the principle that a defendant must “actively” engage in one of the protected activities under the Copyright Act. In Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F.Supp.2d 1146 (C.D. Cal. 2002), the Central District of California collectively examined cases involving liability and computer technology. The Perfect 10 Court noted that the Ninth Circuit and other District Courts have repeatedly rejected arguments of direct infringement where software or hardware schemes automatically produce copies of the allegedly infringing images and the defendants do not actively participate in such activity. Perfect 10, 213 F.Supp.2d at 1167-69. The Court also noted that other courts had found direct infringement where the defendants were:

encouraging subscribers to upload files onto its system, viewing the files in the upload file, and then moving the uploaded files into files generally available to subscribers. This transformed the defendants from passive providers of a space to active participants in the process of copyright infringement. The moving of the files, accomplished by employees constituted the distribution, and the display of those copies after the BBS's employees placed the files there violated the right of display.

Perfect 10, 213 F.Supp.2d 1168 (citations omitted; emphasis in original).

         In the instant case, the Court finds the circumstances more akin to those where software or hardware schemes automatically produce copies of the allegedly infringing images and the defendants do not actively participate in such activity. Indeed, the evidence in the record demonstrates that the content of the detail pages and advertisements was supplied by third-parties via an automated file upload system, and did not originate from Amazon. Dkts. #33 at ¶ 4; #32 at ¶; and #35 at ¶ ¶ 6 and 17. This evidence has gone un-refuted by Plaintiffs. Thus, it does not appear that Amazon actively participated in the alleged copying of the digital images at issue.

         Finally, the Court rejects Plaintiffs' contention that Amazon is liable for trademark infringement based on its sales and shipment of physical items. Here, the evidence demonstrates that Amazon is not the seller of the alleged infringing products. See Dkt. #35 at ¶ 12. Likewise, third-party sellers retain full title to and ownership of the inventory sold by the third party. Dkt. #34 at ¶ 4. Plaintiffs have provided no evidence to the contrary with respect to any specific third party involved with the products in this case. Accordingly, the Court concludes that Amazon was not the seller of the products at issue here. Hendrickson v. Amazon.com, Inc., 298 F.Supp.2d 914, 915 (C.D. Cal. 2003) (holding that under similar circumstances Amazon was an internet service provider for the third party and not a seller).

         2. Safe Harbor ...


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